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Executive Summary – Defined
An executive summary is an important part of a business plan. It summarizes the key points and gives an overview of the whole business idea. The main theme of the executive summary is to summarize the main points of the document for the reader.
What should I know about drafting a business plan executive summary?
Include the main points of the business plan in a voice consistent with that of the language in the body of the plan. The executive summary is a summation of your entire business plan. Many instructional guides will recommend taking the first and last sentences of each paragraph to develop the body of the summary. While this may be an effective technique for including the components of the business plan, it misses a fundamental purpose of the executive summary – creating a voice for the business.
The business plan has to capture the essence of the business and project the same level of exuberance, confidence, and ambition as the entrepreneur. Below is an overview of what you should include and aim to achieve within your business plan.
Overview of Executive Summary
The executive summary should tell all of the main points of the business plan in a concise format. However, there is more to writing the executive summary than simply being able to synthesize large amounts of material into a couple of short paragraphs.
You are attempting to translate the larger body of the business plan into a concise summary that adequately demonstrates the venture’s value proposals. An effective executive summary maintains the same voice as the body of the business plan. For example, if you use an exuberant and excited tone in describing your product, your executive summary should mirror this voice. Try to create anticipation for the body of the business plan that will follow.
Your objective should be to explain the product, service, or idea, the core business model, and the value creation process to the reader. Hopefully, after reading the executive summary, the reader will approach each section of the business plan with a basic understanding of what the section includes and will explain in further detail.
Contents of the Executive Summary
It depends on your business whether you are going to launch a new business or you already have an established business.
- Startup Business – Describe what your business is and how it can be an opportunity for investors as well as customers.
- Taking advantage of the opportunity – Explain how your business will serve the market and fulfill their needs.
- The target market – Describe and clarify who will be your target customers?
- Business Model – Describe your sales forecast, revenue, expenses, and target market to convince and make it more appealing.
- Marketing Strategy – Give an outline of how the product will be marketed and promoted in the market.
- Competition – Define all characteristics of your business that make it more appealing and give you a competitive edge to capture market share.
- Financial analysis – Summarize your forecasted financial budget, revenues, expenses, etc.
- Implementation plan – Describe all details of how you are going to implement your business idea and strategy in the real world.
For established firms, an executive summary usually includes the following details.
- Mission statement – It describes what does your business does and what it serves.
- Company Information – This section gives an overview of the company. It includes formation date, location, number of employees, statistics, etc.
- Business Highlights – It consists of details of how your sales, revenues and market share grew over time.
- Financial Summary – It includes a financial summary of the company such as revenue, expenses, assets, liabilities, etc. if a company wants to expand its business then it may include the financing needed for expansion.
Tips on Drafting the Executive Summary
Wait until the rest of your business plan is substantially complete before beginning work on the executive summary. You can’t adequately summarize the parts of the plan until you’ve thought through and have begun to develop the different sections. Like the body of your plan, the executive summary will necessarily change and evolve as the business plan evolves.
As you know you may use the business plan as either a planning tool or as a manner to obtain a loan or equity financing. You will likely modify the executive summary slightly depending on its intended purpose.
Length of the Executive Summary
Opinions vary as to the appropriate length of the executive summary. In truth there is no magic length for the summary; rather, you should edit the summary to fit the intended use and expectations of the reader. An executive summary for a bank will generally be a bit longer than the executive summary being presented to a venture capitalist. The reason is more a matter of time and attention to detail.
A venture capitalist will want to see a summary that concisely explains the concept – similar to the elevator pitch (business pitch). A bank lender, on the other hand, will review the plan more thoroughly as part of the business loan application. A well crafted and thorough business plan can lay out a more complete understanding upfront that maximizes comprehension of the body of the business plan. In either case, you will continue to mold and scope the business plan to present the most accurate and effective presentation of your business’ value proposition and how you intend to carry it out.
Final Points on the Executive Summary
In my humble opinion, the executive summary is the most valuable portion of planning purposes. This section causes you to think about the business holistically. You are tasked with summarizing everything you do or plan to do into a few concise paragraphs that will appeal to the intended recipient. This is where you will be able to compare the strength and fit between the portions of the business plan.
References for Business Plan Executive Summary
Academic Research on Business Plan Executive Summary
- ● Entrepreneurial small business, Katz, J. A. (2009).
- ● Entrepreneur passion and preparedness in business plan presentations: a persuasion analysis of venture capitalists’ funding decisions, Chen, X. P., Yao, X., & Kotha, S. (2009). Academy of Management journal, 52(1), 199-214. This paper analyses the extent to which Venture Capitalist’s (VC’s) perception of entrepreneurial passion influence their investment passion. It goes on to provide a more detailed explanation of the term entrepreneurial passion, and analyses the concept of VC’s decision making processes.
- ● The strategy-focused organization, Kaplan, R. S., & Norton, D. P. (2001). Strategy and Leadership, 29(3), 41-42. In this study, Robert Kaplan and David Norton show how the Strategy-focused Balanced Scorecard can be transformed from a tool for performance measurement to a tool for creating a strategy-driven performance management company.
- ● Executive summary of the AVMA one health initiative task force report, King, L. J., Anderson, L. R., Blackmore, C. G., Blackwell, M. J., Lautner, E. A., Marcus, L. C., … & Pappaioanou, M. (2008). Journal of the American Veterinary Medical Association, 233(2), 259-261. In this article, the author explains the concept and processes of the One Health Initiative Task Force (OHITF). He goes on to show the benefits and the shortcomings of this program.
- ● Should investors bet on the jockey or the horse? Evidence from the evolution of firms from early business plans to public companies, Kaplan, S. N., Sensoy, B. A., & Strömberg, P. (2009). The Journal of Finance, 64(1), 75-115. This paper studies the evolvement of firms characteristics from early business plans to Initial Public Offerings (IPO) for 50 venture-capital (VC) financed companies.
- ● Return on relationships (ROR): the value of relationship marketing and CRM in business-to-business contexts, Gummesson, E. (2004). Journal of business & industrial marketing, 19(2), 136-148. This paper analyses the concept and different questions concerning the profitability of relationship marketing. This paper aims to show the current efforts to generate knowledge of return on relationships, with more emphasis placed on business-to-business (B2B) environment. The paper goes on to produce action strategies to improve relationship marketing returns, and presents a summary of conclusions.
- ● Why haven’t we mastered alignment? The importance of the informal organization structure, Chan, Y. E. (2002). MIS Quarterly executive, 1(2), 97-112. This paper analyses the challenge of aligning information systems (IS) function/department in small and large enterprises as a whole. This study examines the techniques that eight organizations have used to both monitor and improve the alignment and performance of their IS functions. Results show that aligning the IS and business strategies improves the performance of the IS. It also shows that aligning IS with formal organization structure doesn’t always improve its performance as opposed aligning it with an informal organization structure.
- ● Form or substance: the role of business plans in venture capital decision making, Kirsch, D., Goldfarb, B., & Gera, A. (2009). Strategic Management Journal, 30(5), 487-515. This study explores a well‐known instance of fast decision making under high uncertainty, venture capital (VC) opportunity screening. It goes on to analyze a sample of 722 funding requests submitted to an American VC firm and evaluate the influence of the form of the submission and content of business planning documents on VC funding decisions. The aim of this paper is to improve former literatures pertaining to this topic.
- ● Assessing and managing the benefits of enterprise systems: the business manager’s perspective, Shang, S., & Seddon, P. B. (2002). Information systems journal, 12(4), 271-299. This paper focuses on the benefits that organizations may achieve from their investment in enterprise systems (ES). It proposes an ES benefit framework for summarizing benefits in the years after ES implementation. Data from 233 enterprise systems vendor‐reported stories published on the Web and on interviews with managers of 34 organizations using ES is used as case study. This paper aims to show how the framework has been applied to the identification of benefits in a longitudinal case study of four organizations.
- ● The entrepreneur next door: Characteristics of individuals starting companies in America: An executive summary of the Panel Study of Entrepreneurial Dynamics, Reynolds, P. D., Gartner, W. B., Greene, P. G., Cox, L. W., & Carter, N. M. (2002). This paper examines the Panel Study of Entrepreneurial Dynamics attempt to provide systematic, reliable data about the fundamental nature of the business start-up or entrepreneurial process. 830 nascent entrepreneurs were identified from a sample of 64,622 U.S. households, and their business startup activities were followed over a two-year period. This paper further reports the first stage of the initial sample of 64,622 households and the screening interviews.The aim of this paper is to analyse the number of individuals willing to become entrepreneurs.
- ● Judging a business by its cover: An institutional perspective on new ventures and the business plan, Karlsson, T., & Honig, B. (2009). Journal of Business Venturing, 24(1), 27-45. This paper investigates how the initial conformity to business plan norms gradually and without exception can lead to loose coupling.